Critical Survey: Albemarle (NYSE:ALB) vs. Air Products and Chemicals (NYSE:APD)

Air Products and Chemicals (NYSE:APD) and Albemarle (NYSE:ALB) are both large-cap basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, valuation, analyst recommendations, earnings and risk.

Valuation & Earnings

This table compares Air Products and Chemicals and Albemarle”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Air Products and Chemicals	$12.46 billion	5.10	-$394.50 million	$9.45	30.23
Albemarle	$5.49 billion	3.46	-$510.63 million	($3.41)	-47.26

Air Products and Chemicals has higher revenue and earnings than Albemarle. Albemarle is trading at a lower price-to-earnings ratio than Air Products and Chemicals, indicating that it is currently the more affordable of the two stocks.

Dividends

Air Products and Chemicals pays an annual dividend of $7.20 per share and has a dividend yield of 2.5%. Albemarle pays an annual dividend of $1.62 per share and has a dividend yield of 1.0%. Air Products and Chemicals pays out 76.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Albemarle pays out -47.5% of its earnings in the form of a dividend. Air Products and Chemicals has raised its dividend for 43 consecutive years and Albemarle has raised its dividend for 30 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

81.7% of Air Products and Chemicals shares are held by institutional investors. Comparatively, 92.9% of Albemarle shares are held by institutional investors. 1.9% of Air Products and Chemicals shares are held by insiders. Comparatively, 0.4% of Albemarle shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Air Products and Chemicals and Albemarle’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Air Products and Chemicals	16.91%	16.11%	6.92%
Albemarle	-5.00%	5.22%	2.51%

Analyst Recommendations

This is a summary of recent ratings and target prices for Air Products and Chemicals and Albemarle, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Air Products and Chemicals	0	6	10	1	2.71
Albemarle	1	11	14	1	2.56

Air Products and Chemicals presently has a consensus price target of $323.12, suggesting a potential upside of 13.09%. Albemarle has a consensus price target of $203.04, suggesting a potential upside of 25.99%. Given Albemarle’s higher possible upside, analysts clearly believe Albemarle is more favorable than Air Products and Chemicals.

Risk and Volatility

Air Products and Chemicals has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500. Comparatively, Albemarle has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500.

Summary

Air Products and Chemicals beats Albemarle on 12 of the 17 factors compared between the two stocks.

About Air Products and Chemicals

Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and related services in the Americas, Asia, Europe, the Middle East, India, and internationally. The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas; and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food, and metals. It also designs and manufactures equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. The company was founded in 1940 and is headquartered in Allentown, Pennsylvania.

About Albemarle

Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Energy Storage, Specialties and Ketjen. The Energy Storage segment offers lithium compounds, including lithium carbonate, lithium hydroxide, and lithium chloride; technical services for the handling and use of reactive lithium products; and lithium-containing by-products recycling services. The Specialties segment provides bromine-based specialty chemicals, including elemental bromine, alkyl and inorganic bromides, brominated powdered activated carbon, and other bromine fine chemicals; lithium specialties, such as butyllithium and lithium aluminum hydride; develops and manufactures cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications that include airbag initiators. The Ketjen segment offers clean fuels technologies (CFT), which is composed of hydroprocessing catalysts (HPC) together with isomerization and akylation catalysts; fluidized catalytic cracking (FCC) catalysts and additives; and performance catalyst solutions (PCS), which is composed of organometallics and curatives. The company serves the energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, and crop protection markets. Albemarle Corporation was founded in 1887 and is headquartered in Charlotte, North Carolina.